Interview: Majid Al Futtaim chief Alain Bejjani
The newly appointed CEO of Dubai conglomerate Majid Al Futtaim cannot recall why he left his blossoming career as a lawyer to become a businessman.
“It was far too long ago,” Alain Bejjani tells Arabian Business in an exclusive interview. “However, I was always an extremely business-orientated legal practitioner, and honestly, in my view, there is little difference. You cannot effectively do business if you don’t understand the law and you cannot be a good legal practitioner if you don’t understand business.”
Bejjani joined Majid Al Futtaim’s property business in 2006 as vice-president legal after establishing law firm Bejjani Melkane Rached in Beirut and serving as executive vice-chairman of the Investment and Development Authority of Lebanon from 2001.
He was appointed head of business development for Majid Al Futtaim Properties in 2009, overseeing its acquisitions and development pipeline and garnering a solid knowledge of the company.
Still, Bejjani is cautious about this interview — his first in full-length since taking over from Iyad Malas in February. He declines to discuss the intricacies of each of Majid Al Futtaim’s four businesses: Majid Al Futtaim Holding, Majid Al Futtaim Properties, Majid Al Futtaim Retail (including Middle East branches of French supermarket Carrefour) and Majid Al Futtaim Ventures (covering the well-known leisure and entertainment brands Ski Dubai, Magic Planet and Vox Cinemas).
Not only is Majid Al Futtaim vast — it reported group revenues of $6.8bn for the year to March 2014 and has over $12bn of assets under management — but also, he says, the company prides itself on having dedicated management teams for each business, including separate boards, rather than a group-wide governance structure.
“By focusing on the individual areas of the business you can deliver better results,” Bejjani says. “Particularly as it’s often the smaller parts of the business that present the biggest challenges.”
Launched two decades ago, Majid Al Futtaim now operates in 13 markets across the Middle East and North Africa, and owns and operates 17 shopping centres, 11 hotels and three mixed-use schemes in the region. Earlier this year it announced plans to double in size over the next five years and Bejjani says the company is “progressing well with our growth strategy.”
In Dubai, Majid Al Futtaim is pumping $817m between 2013 and 2016 into projects including a 25,000 sqm expansion of Mall of the Emirates, complete with a new dining section and 24-screen Vox Cinemas, and the construction of the newest addition to its City Centres portfolio, in Me’aisem, Dubai International Media Production Zone.
Bejjani said in March, the group had a 25 percent market share of Dubai's total retail leasing space and intended to double it by 2020.
Elsewhere in the region, Majid Al Futtaim is working on a 10,000 sqm expansion of City Centre Muscat, is scheduled to open Saudi Arabia’s first Magic Planet indoor children’s attraction later this year, and is investing $272m in regional expansion of the Vox Cinemas chain over the next five years. Last month, it agreed to a deal for Michelin-starred chef Gary Rhodes to create a food and drinks menu exclusively for its cinema-goers.
Meanwhile, Majid Al Futtaim is pressing forward with its whopping $2bn investment in Egypt, a relatively untapped market for the group, where it is building several City Centre malls including in Alexandria and Maadi, and the much-anticipated 163,000 sqm Mall of Egypt in Cairo, scheduled to open in the first quarter of 2016 with 400 stores.
“The scale of the country was the reason Egypt was identified as a growth market for us,” Bejjani said in March.
The group is due to publish its second quarter results later this month, and Bejjani says 2015 is shaping up to be an even better year than 2014, when revenues grew by 11 percent year-on-year.
“Last year was a very good year and this year we are going to exceed last year’s results and our initial expectations,” he says.
“Every business we have is performing against or exceeding its targets and this is extremely important for us — we do not want one business pulling the others. We are very confident in our capability.”
However, Bejjani insists “sustainable” growth is more important to the group than targeting mindless expansion. “Sustainability for us is different from the classical definition used to describe [environmentally friendly] buildings and so on,” he says. “What we mean by the term is that any proposed growth is underpinned by strong organisational health. Strong management policies, good people, robust ways of monitoring our practices — so that we can continue to export our operational excellence from our home markets to newer countries.
“It’s about improving the customer experience and creating great moments for everyone.”
In uttering this piece of CEO-speak, Bejjani is referring to the group’s corporate branding campaign and official vision — “To Create Great Moments for Everyone, Everyday” — launched to celebrate its 20th anniversary this year.
Throughout 2015, the group is running a series of events, promotions and activities at each of its destinations, and an internal innovation competition, challenging its employees to come up with new retail-specific ideas that can be rolled out across the region.
The slogan is important for the company because, Bejjani says, today’s customer is increasingly discerning. “We are confident that there is room for growth, but the difference now compared to previous years is that [achieving] growth is not a walk in the park.
“It is there, but to capture it you have to earn it. There are more competitors in the market, which keeps us on our toes and, crucially, there is more awareness from the customer about what they want from malls, hotels, entertainment and so on.
“The major shift we are seeing is that the customer is demanding more inspiring experiences. Shopping is no longer just a chore, where you go to the shops because you need, say a new phone. It’s not about need anymore; customers are looking for new experiences when they shop.”
Bejjani will not elaborate on what specific experiences customers are demanding, saying only: “Majid Al Futtaim is not just a shopping mall operator; it is a lifestyle brand and touches people’s lives. The seamless integration of our various brands, like malls with hotels attached, Magic Planet attractions, Vox Cinemas, is what distinguishes the Majid Al Futtaim proposition.”
However, he is happy to provide an example of the group’s “customer-centric approach”. “Always, whatever new product we bring to the customer, we have to take into account what matters to them. And what matters to a customer in Qatar might be different from a customer in Egypt.
“Take the supermarket concept of fresh produce. In Europe, anything sealed in plastic and cooled properly is ‘fresh’. In China, though, ‘fresh’ means alive. So the fish has to actually be swimming, and they will capture it and sell it to you on ice. Every market has its own differences, and customers in these markets will require different things.”
Similarly, socio-demographic factors affect the retail offer in different locations within the same city. “[In Dubai] people living in Al Barsha will have different expectations from those in Deira. We might sell more high-end electronics and homeware products in affluent areas, while in other areas our focus might be on canned food.”
Majid Al Futtaim has significant presence in GCC countries such as the UAE, Bahrain, Oman, Saudi Arabia and Lebanon, and Bejjani adds: “There is no country in the region in which we do not already operate at least one of our businesses”.
Of these markets, Dubai continues to present significant opportunities because of its affluent customer base and thriving retail and leisure industry — fuelled in no small part by tourism, Bejjani says. This is unlikely to change, particularly if Dubai delivers on its ambitious target to bring in 20 million visitors by 2020.
“Dubai has a clear strategy of attracting tourists from across the globe — the government’s vision is being visibly translated into working with the private sector to reinforce the emirate’s retail, hotels and entertainment offering. I think whatever Dubai is promising, Dubai is delivering, which is very comforting to investors,” Bejjani says.
However, over the next five years Majid Al Futtaim is targeting complementary growth in nearby countries such as Jordan, Armenia, Kazakhstan, Azerbaijan, Georgia and many in Africa, where it has announced plans to open its first Carrefour outlet by the end of 2015.
Arabian Business reported in March the first African store would be in Kenya, to anchor the Two Rivers mall in Nairobi, but Bejjani says only: “It’s in Africa, that’s all I’ll say”. He insists the deal is signed and further announcements will be made once the store is ready to open.
All decisions regarding expansion into new markets are made according to the company’s strict economic standards, such as requiring at least a BBB credit rating, as well as assessments of the market potential and the business environment.
“We do not operate through a target number of stores,” Bejjani explains. “The concept of expansion equals growth is what’s important to us. Sometimes more stores does not equal growth.
“Whenever you are starting in new countries you have to be humble enough to start with a single store, make sure you have everything right, are meeting the customer’s needs, and go from there — adapting your formula until you have the right solution.”
Does this mean the group would ditch proposals for a second or third outlet in that market if the first goes badly wrong? “Not at all,” he says. “If it goes wrong, we fix it and move on.”
Similarly, no macroeconomic issue poses too great a challenge for Bejjani. “It’s normal that from time to time you get cyclical stuff but there is always something compensating for it.”
And he is equally unfazed when it comes to speculating on the impact of huge shifts such as the rise of online shopping.
“Things that were not here five years ago are now the basis of customer experience,” he says, describing digital as a “growing reality” but not yet a significant challenge to his bricks and mortar-based business.
“As you may remember, not long ago people used to buy from mailing catalogues. So if you think about it, there were stores, and there was also a catalogue that enabled you to order what you wanted without leaving your home. The catalogue did not kill the retail industry,” Bejjani says.
“Today, e-commerce is the modern equivalent of being able to shop from home. And it is not new. The first audiovisual/leisure offering was cinema. But home TV came and cinema did not die. Before the cinema there was theatre; theatre is still here, TV is still here, the video/DVD is still here, all of these things are still here and the internet is here and will continue to evolve.
“It’s the same with retail — all of these channels will remain, we just have to adapt to the technology and adapt the technology to people’s needs.”
The internet also provides plenty of opportunities for lucrative e-commerce, such as ‘click-and-collect’.
Meanwhile, Bejjani says there are no plans to sell any part of the group via an initial public offering (IPO). “Typically that is a means to an end, and we are a privately owned business and feel we have the appropriate capital structure and don’t need to change that,” he says.
Bejjani’s goal is to focus on sustainable growth and set the standard of “blue chip corporate governance” for other private companies in the region.
At this point he questions the length of the interview. “Is this one interview or ten?” he asks. “Will the whole issue be about me?” I reassure him it will not, but the truth is, you probably could fill an entire magazine with everything the conglomerate is up to — and according to Bejjani, that will remain the case for the foreseeable future.
